Jun 26, 2006—The U.S. arm of RFID industry body EPCglobal has introduced three new modeling tools, designed to help businesses understand how EPC-based RFID technology might impact their organizations. The software tools—a set of spreadsheets with preprogrammed formulas that calculate financial impacts—are designed for three vertical markets: aerospace, chemical and retail pharmacy.

"Companies can use these models as they are building their RFID business models," says Bob Celeste, director of adoption tools at EPCglobal US. The firms enter their business data into the spreadsheet, such as the number of products to be tagged. The software then generates an analysis and estimates the one-time and annually recurring benefits and costs of an EPC RFID implementation over a five-year period. "Once they see the results, companies can start planning where to accelerate their [deployment plans] and postpone certain costs, how to spend capital and how early they will see benefits," Celeste says.

Bob Celeste

The models base their calculations on specific data derived from individual companies. Thus, they can help customers determine how best to extract a return on investment from an RFID implementation. "We don't want to come out of the box and say everybody is going to improve inventory management if they use RFID," says Celeste. "If RFID was used mainly by a company to improve inventory management, and that company had very tight inventory management today, it may see a very small return. Another company that has looser inventory control will see bigger gains, and may want to focus on that aspect when developing its business case."

The announcement follows last year's introduction of two other models, the EPC Value Model for Healthcare and Life Sciences, aimed at pharmaceutical manufacturers and distributors (see EPCglobal US Offers Tool for Pharma), and the CPG Value Model, designed specifically for consumer packaged goods (CPG) manufacturers (see New Tool for Assessing RFID's Value).

The models are all designed to help companies build the best business case for their own operations. While the three new models share common core components with each other, they vary according to each industry's use of RFID. For example, pharmaceutical retailers are chiefly concerned with using RFID to eliminate shrinkage and product obsolescence, manage drug expiration dates, and track and locate inventory. Aerospace companies are more focused on monitoring and locating parts and general asset management. The chemical industry, meanwhile, is looking at using RFID to help mitigate risks and manage hazardous materials, as well as improve supply chain flows.

While developing the models, Celeste says, EPCglobal discovered new RFID applications for each industry. For example, when the organization began developing the models with chemical companies, it started examining how RFID could be used to help combat the rising costs of raw materials, known as feedstock. "This isn't something that you'd think of with RFID, since feedstock is delivered in pipelines, not cases or pallets," Celeste says. Some feedstock, however, is delivered in large containers on ships, and any delivery holdups—such as a ship stuck in customs—could delay a chemical company's processes. If the shipping containers had RFID tags, companies could be alerted to any bottlenecks and take necessary actions, such as canceling an order with one company and reordering with another able to deliver the stock on time.

The new value models, as well as related usage manuals and white papers, will be available in July from EPCglobal US's Web site. EPCglobal US subscribers will be able to download them for free.

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